Battle Over Compulsory Licenses in Colombia Highlights Global Importance of IP

Michi Iljazi

June 2, 2016

The Taxpayers Protection Alliance (TPA) has been a vocal supporter for strengthening intellectual property (IP) both in the United States and around the world.  In the United States alone, more than 40 million jobs rely directly and indirectly on IP.  There are constant threats to IP in the United States and around the world. Currently, discussions are being held in Colombia over the Novartis anti-cancer drug Glivec. The end result of these discussions could have implications for trade, IP, and business all over the world.

The IP issue with Glivec is the potential use of a compulsory license (CL) by the Colombian government.  A compulsory license “allows a local company to make a patent-protected drug without the consent of the patent holder. “ The Colombian government wants to override the legally obtained patent that Novartis has on the drug so they can make it and sell it at a lower cost, unless the pharmaceutical giant agrees to lower their prices to a rate the Colombian government deems acceptable.

Governments have been able to attain compulsory licenses before, so this is not something completely out of the ordinary. Countries have obtained compulsory licenses in the past when facing health crises but in the case of Colombia it is being used as a way to force price negotiations, which is unprecedented. Kejal Vyas noted the difference with this proposed compulsory license in a recent article on the issue for The Wall Street Journal:

“Countries like Brazil and India have targeted drug patents in the past, drawing criticism from the U.S. government and pharmaceutical industry groups. But Colombia, a country of 47 million that economists view as market friendly, has never before issued a compulsory license.”

This brings about several issues and dangerous precedent that could be set if the Colombian government continues to try and attain the compulsory license:

  • The implications for price negations worldwide going forward would create a real fear amongst companies that own legitimate patents on drugs they produce.
  • Trade could be severely impacted as the pharmaceutical industry plays a major role in the global economy ($300 billion/yr worldwide, according to the World Health Organization).
  • IP would be undermined in such a way that legitimate patents could be threatened as more CLs are pursued for reasons other than major health crises.

The United States government is aware of what is going on and they understand the concerns of not just Novartis, but the entire pharmaceutical industry. Both the US Trade Representative’s office and Senate Finance Committee (which has jurisdiction over trade matters) have been involved in discussions with the Colombian government aimed at finding a solution to preserve the relationship between the two countries on trade, and avoid setting a bad example moving forward when it comes to how drug prices are negotiated internationally.

Granting the compulsory license for Glivec would be a troubling development in what has been a constant fight to protect and strengthen IP rights both at home and abroad.

The key to creating better solutions for the health problems and sicknesses that people face all around the world is investment and innovation.  Investment in new technologies, new drugs, and new cures can only be made possible when inventors can invent and creators can create. Governments must not discourage the kind of innovation and investment required to create, develop, market, and distribute life-saving drugs like Glivec.

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